WSHMMA CMRP Overview
Chris Matala, CMRP
Director, Supply Chain & Sterile Processing
Island Hospital
Dave Hinkle, FACHE, CMRP
Director, Supply Chain Outreach and ValueSource
Providence Health & Services
Your Presenters – Chris Matala
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Credentials
– BS, Central Washington University
– MBA Prepared, St. Martin College
– Certified Materials Resource Professional, Association
for Healthcare Resource & Materials Management
– WSHMMA Board Member
– AHRMM Education Committee
Twenty Four years HealthCare Managment
Director, Supply Chain & Sterile Processing, Island Hospital
Recent Positions
– Purchasing Manager Harrison Medical Center
cmatala@islandhospital.org
360-299-1304
Your Presenters – David Hinkle
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Credentials
– BS, Missouri State University
– MHA, Baylor University
– MPA, Clark University
– Mouse Ears, Disney University
– Fellow, American College of Healthcare Executives
– Certified Materials Resource Professional, Association
for Healthcare Resource & Materials Management
Ten year presenter, AHRMM CMRP Training
Director, Supply Chain Outreach, Providence Health and Services
– Manages relationships with Providence’s non-owned Supply Chain
– Manages Providence’s internal Supply Chain consulting activities
Recent Positions
– President, Pinnacle Consulting Services
– Senior Director, VHA’s Consulting Services
– Director, Operations Redesign, Johnson & Johnson/The McFaul
– Director, Support Services and Supply Chain, Hillcrest Baptist
Medical Center, Waco, Texas
David.Hinkle@providence.org
856-816-7150
affiliates
& Lyons Group
CMRP Overview Session Disclaimer
• Please be advised that this is only an overview of the Materials
Management Review Guide and assumes the attendee has read and
is familiar with the guide.
• It should not be inferred that test items in the examination are
selected from any single reference or set of references or that
participation in this review session guarantees a passing score on
the examination.
• No portion of this presentation may be reproduced by an attendee
without the expressed written permission of the presenter.”
*Nothing is guaranteed in life. No such thing as a “free lunch”. But
if you study, you should pass.
A Mark of Distinction
CMRP status allows you to:
– Have a premier credential based on a sound assessment to
distinguish yourself in an increasingly competitive
marketplace.
– Enjoy the pride of recognition and knowing you are among
the elite in the field of healthcare materials management.
CMRP status sets you apart from your peers
American Hospital Association Certification Center
The CMRP process is:
• Governed by a Board of Directors
• An independent body affiliated with the AHA
• Certification Program Committee
– Content experts
– Test development
– Scoring and analysis
• Designed to test full scope competency of individuals involved
in healthcare supply chain management
Eligibility - Concept
In 2003, the CMRP eligibility requirements changed to include
job challenges faced by supply chain professionals in both the
hospital and healthcare industry related settings on a daily
basis. The requirements are constantly reviewed and continue
to blend experience and education.
Participants should include experienced healthcare supply chain
leaders and professionals.
There is no membership requirement but the fee is significantly
reduced if you are a member.
CMRP Eligibility
• Baccalaureate degree plus three (3) years of associated healthcare resource
and materials management* experience; or
• Associate degree or equivalent plus five (5) years of associated healthcare
resource and materials management* experience; or
• High school diploma or equivalent plus seven (7) years of associated
healthcare resource and materials management* experience.
*Experience includes persons who are involved in the materials functions of
healthcare facilities; or are active in the healthcare supply chain, including
manufacturers, vendors, distributors, consultants, and employees of group
purchasing organizations.
Steps for Administration
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Application for examination processed
Eligibility confirmation sent to candidate
Confirmation notice received
Fees
– Members - $275 (Periodically AHRMM awards CMRP
scholarships to members.)
– Non-members - $425
• Schedule appointment; reschedule once within 4 business days
at no charge
• Rescheduled within 90 days - $100 rescheduling fee
• Reschedule after 90 days must resubmit application and pay a
fee of $275/members or $425/nonmembers
Steps for Administration
• Selected H&R Block computer centers or AHRMM National Meeting
• Photo ID (2 forms of ID)
• Computer-based
– 2 hours
– 110 questions (10 potential future use but don’t count)
• Results immediately upon completion
• Notice of successful completion
– Letter of congratulations
– Pin
– Renewal packet
– Employer notification letter
– Your name on the CMRP website identifying you as a Supply Chain
professional
Exam Content
The AHRMM role delineation study identified real-world tasks that
were grouped into categories and weighted to produce exam
specifications.
1.
2.
3.
4.
5.
Purchasing/Product Value Analysis
Inventory/Distribution Management
Information Systems
Finance
Strategic Planning/Leadership/Support Services
This is how the examination is organized. However, like
real-life, day to day problems don’t come batched
together by category, the same is true with the
examination.
Earlier this year the exam content was changed.
Exam Questions Categorized
Recall
– The ability to recall or recognize specific information
Application
– The ability to comprehend, relate or apply knowledge
to new or changing situations
Analysis
– The ability to analyze and synthesize information,
determine solutions and/or to evaluate solutions
Test Items
To ensure reliability and validity, test items are:
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Written by experienced healthcare resource and materials
managers;
Geared to test application of knowledge - not just recall of
facts; and,
Reviewed to ensure clarity.
Notes on Terminology
Important Notice:
The various statements, terms, and definitions provided herein
(and in the CMRP Examination Review Guide) are what the
AHRMM CMRP Committee considers the most common use
of these expressions. Should another use of these statements,
terms and definitions be found in “industry”, it is
recommended to pay close attention to how these items are
used in this presentation and review guide. Note that the
AHRMM “definition” will be the one used to process the
examination.
Measurement Expertise
To ensure the highest standards in testing, the AHA Certification
Center engaged Applied Measurement Professionals, Inc. (AMP) to
assist with:
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Test development;
Test administration; and
Scoring, score reporting, and analysis.
Administration
The CMRP Exam
is offered on
computers at over 150 secure test
centers throughout the U.S.
Scores are private. Only the applicant
receives the scores.
Administration
The examination application is contained inside the CMRP Handbook and
Application and is available by downloading a copy from:
• The AHA Certification Center,
www.aha.org then click on “Certification; or
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Call Applied Measurement Professionals, Inc. (AMP) at 888-519-9901
AHRMM’s Web site, www.ahrmm.org
Exam Provisions
The Examination fee is:
 $275 for any PMG or At-Large Member; or
 $425 for a nonmember.
Certification is valid for three years. (45 hours to recertify so start
keeping track.)
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Keep copies of training agendas to document attendance
You get “two times” the credit for programs you present
This is not a program to start a month before your renewal
If you fail to recertify, you must re-take the examination
Preparing for the Exam
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AHRMM CMRP Candidate Handbook and Application (White Book, free)
– http://www.aha.org/certifcenter/files/12CMRPhandbook.pdf
– CMRP Examination Content Outline provides valuable information on the topics
AHRMM deems important
AHRMM CMRP Study Guide, 5th edition (White Book, $75, members; $95, nonmembers)
CMRP preparation presentations
– AHRMM, National Meetings
– AHRMM Webinars
– AHRMM Regional and State Chapters
Optional purchase of the “pre-test” from AHRMM
Optional purchase of this Webinar CD from AHRMM
Non-AHRMM study materials, such as flash cards (not endorsed)
Presenter’s study materials-free upon request
Develop internal study sessions (brown-bag-lunch) with your local peers or at your
facility site-consider dividing up the various sections
Preparing for the Exam
Examination Content
• The following five sections provide a brief overview of the
examination elements, as provided by AHRMM in the Candidate
Handbook, CMRP Examination Content Outline.
• Each section provides a list of those job elements and expertise
a supply chain professional should possess in order to be
successful in managing the hospital department.
• A study suggestion would be to review the elements and then
read the Materials Management Review Guide with a focus on
those areas.
• After you take the practice exam you can focus on the areas
where you missed questions.
Procurement/Product Value Analysis
25 percent
Requisitions
Purchase Orders
Purchasing Terms and Conditions
Legal Aspects of Purchasing
The Materials Management Toolbox
Value Analysis
CQO Process
Procurement
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Direct the program to purchase materials, supplies, and capital equipment being
mindful of:
1) specific patient needs (e.g., pediatric, geriatric, bariatric).
2) green initiatives (Leadership in Energy and Environmental Design (LEED)).
Participate in the organization’s purchasing process, including:
1) budgeting
2) contracting or sourcing
3) purchasing
4) receiving
5) inventorying
Participate in the organization’s capital purchasing process, including:
1) budgeting
2) evaluating/selecting
3) negotiating
Procurement
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Implement advanced purchasing and procurement techniques for:
1) contract negotiation
2) competitive bidding
3) material use evaluation
4) comparative costing
5) product standardization
Evaluate purchase agreements for:
1) product quality consistent with standards for patient care
2) lowest possible total procurement cost
3) cost protection for extended periods of time
4) cost increase ceilings
5) consignment agreements with competitive prices
6) stockless purchasing agreements
Procurement
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Develop systems and procedures that minimize the customer cost of ordering,
storing, and using supplies, services, and equipment.
Ensure that timely order placement, expediting and supplier performance analysis
take place and are continuously reviewed for effectiveness.
Direct audit activities, including the review of discrepancies, purchase orders,
invoice price, payment terms, lost rebates, performance criteria, contract terms
and conditions.
Lead focus groups for review and analysis of products and supplier services.
Prepare cost benefit analyses that support best product recommendations.
Negotiate competitive pricing, terms, and service levels.
Review contracts that optimize value to the organization considering
standardization, utilization, and compliance.
Procurement
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Develop supplier performance standards program to include the auditing and
monitoring of:
1) product quality
2) pricing
3) discounts
4) rebates
5) service charges
6) invoicing
7) service levels
8) vendor competency
Develop supplier performance standards program to include the auditing and
monitoring of The Joint Commission (TJC) standards for vendor tracking.
Direct and understand the components of the value analysis process.
Procurement
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Evaluate purchasing reports (e.g., cost savings, price index, order processing time,
purchase order error rates, work load volume, freight expenditures).
Assure that catalogs, price lists, inventory records, purchase order files, and
product/supplier files are updated and current.
Participate and provide support to materials management standardization,
consolidation and/or re-engineering processes.
Interact with physicians and clinicians to coordinate and integrate
products/services consistent with cost elements and quality management
programs into existing departmental services by assisting with:
1) program development
2) data collection and analysis
3) implementation
4) monitoring
5) measurement and evaluation
Procurement
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Collect and analyze data relating to the therapeutic efficacy and cost effectiveness
of products, equipment, and technology.
Coordinate service training for new products or equipment.
Provide consultation to departments requiring assistance in resource allocation.
Initiate and implement a product utilization review process.
Identify opportunities for reduction in resource consumption.
Provide process review and physician resource analysis of various clinical
applications.
Adhere to a code of ethics to ensure corporate compliance.
Value Analysis and CQO
• Value Analysis:
• Multidisciplinary approach
• Identifies potential alternatives to the product
• Reviews the total delivered cost, not just acquisition cost
• Patient focused, looks at quality and patient impact, not
just price
• Cost Quality Outcome:
• Minimizing Cost, while maximizing Quality Patient
Outcomes
• A way to organize your efforts in meeting the challenges of
the ACA and future trends
Inventory Distribution Management
20 percent
Inventory Programs and Strategies
Inventory Management
Warehouse Design
Distribution Methodologies
Monitoring Performance
Inventory Distribution Management
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Assure that the organization’s acquisition and distribution strategies and practices
improve the overall healthcare system supply chain.
Develop strategies and procedures to integrate all resource functions of the overall
healthcare system.
Monitor and determine causes of inventory variance, and implement corrective
strategies.
Develop inventory reduction targets and process to achieve targets.
Determine effective space for storage (e.g., on-site vs. offsite).
Evaluate warehouse design factors related to:
1) flexibility (e.g., ease of expansion and contraction).
2) total, overall system rather than specific subsystems.
3) automation of materials management function.
4) back-up systems available.
Inventory Distribution Management
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Manage the following inventory and distribution programs and strategies:
1) consignment strategy
2) just-in-time strategy
3) stockless strategy
4) consolidation strategy
5) Vendor Managed Inventory (VMI)
6) electronic point of use systems
7) Periodic Automatic Replenishment (PAR)
8) electronic requisitions
9) random requests and emergency requisitions
10) back-orders
Monitor work flow for returned goods, product recalls and conversions, and
arrange for pickup and/or exchanges
Inventory Distribution Management
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Determine effective receiving process (e.g., centralized, decentralized).
Oversee distribution processes and accountability (e.g., accurate reporting of
customer activity, discrepancies between receipts and supplier invoices).
Determine an appropriate data management system (e.g., tracking of packing slips
and purchase orders, set-up of filing systems, computer systems and receiving
logs).
Develop a Performance Improvement (P1) mechanism for monitoring performance
of the receiving process.
Resolve customer concerns by providing a central point of access, and serve as a
liaison to customer departments and suppliers.
Determine appropriate internal and external material transport devices and
systems to use ((e.g., carts, pneumatic tube systems, automated guided vehicles
(AGV)).
Review and evaluate distribution system performance.
Inventory Distribution Management
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Identify and calculate ratios for inventory management (e.g., inventory turn rates).
Understand implications of regulations and logistics pertinent to delivery and
conveyance of freight to affiliated healthcare facilities (e.g., third party delivery,
cross-docking, and courier services).
Information Systems and Data Management
15 percent
Functional MMIS Requirements
Assessing, Acquisition and Implementation
Supply Chain System Standards
GS1, GLN, GTIN
Records and Data Storage
HIPPA
Information Systems and Data Management
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Define functional requirements, specifications and interfaces for an automated
materials management system.
Assess existing Material Management Information System (MMIS) capabilities and
gap analysis.
Direct acquisition and implementation of an automated, system-wide materials
management information system. (RFP-RFI Process)
Promote development of supply chain system standards.
Apply supply chain data standards to organization MMIS (e.g., GLN, and GTIN).
Employ ANSI X.12 EDI transaction sets.
Establish guidelines and procedures in conjunction with MIS or external users for
participation in the materials management system.
Analyze and present data and analysis to task forces, departmental personnel,
administration, and physicians.
Information Systems and Data Management
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Collaborate with Information Technology and Health Information Management to
facilitate records management storage, archival and retrieval including Health
Insurance Portability and
Accountability Act (HIPAA) compliance.
Investigate software and hardware technologies integrating medical equipment
data and the patient record (e.g., safety infusion pumps).
Finance
20 percent
Financial Terminology (GAAP)
Financial Report Interpretation
Expense Management and Savings Initiatives
Regulatory Standards
Finance
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Review capital requests for compliance with standardization efforts and contract
requirements.
Ensure that the materials management system has comprehensive pricing
information for instruments, supplies, and equipment for budgetary planning.
Review and analyze supply expense and utilization trends to support both clinical
and financial goals, and recommend appropriate budgetary adjustment.
Prepare annual objective and budgetary recommendations including:
1) analysis of budgetary data.
2) coordination of departmental expenditures.
Establish a purchasing and financial document retention and filing system in
accordance with regulatory requirements.
Manage non-labor budgetary expenses.
Finance
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Communicate with Accounts Payable to ensure the following best practices:
1) Generally Accepted Accounting Principles (GAAP) adherence
2) invoice reconciliation
3) timely application of rebates and credits
Demonstrate knowledge of the impact that reimbursements have on the revenue
cycle (e.g., capitation, diagnosis-related groups (DRG’s), CMS, private payers,
charity).
Manage cost-saving programs, including:
1) equipment maintenance
2) capital equipment selection
3) technology assessment
4) consumable product evaluation
5) procurement, inventory management, utilization, and selection of products
and services
Finance
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Understand the relationship to Supply Chain and apply standards from:
1) Robinson-Patman Act
2) Uniform Commercial Code
3) Safe Harbor Regulations
4) Sarbanes-Oxley Act
Strategic Planning, Leadership and Compliance
20 percent
Sterile Processing
Support Department Management
Customer Service
Performance Improvement and Benchmarking
Safety and Emergency Preparedness
Legal and Accreditation Standards
Strategic Planning, Leadership and Compliance
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Oversee tasks in cleaning and preventive maintenance to ensure a high level of
sanitation and infection control.
Manage hazardous waste disposal policies and procedures in accordance with
regulatory requirements.
Demonstrate knowledge of universal precaution guidelines.
Integrate data findings of departmental performance into operational and strategic
planning.
Incorporate key principles of performance improvement in daily operation (e.g.,
customer driven, key player involvement, continuous improvement).
Participate in Performance Improvement (P1) efforts (e.g., benchmarking, analysis
of process flow, operational needs assessment).
Participate in Performance Improvement and Environment of Care Committees,
Corporate Compliance, space planning and construction programs.
Strategic Planning, Leadership and Compliance
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Develop position descriptions and employee responsibilities.
Develop department goals and objectives in concert with the organization’s
mission and strategic plan.
Manage staffing requirements and human resources issues (e.g., patient/customer
focus, union compliance, staff training and development).
Develop customer satisfaction plans, communication links, and measurement
tools.
Analyze market conditions and statistical data and interview suppliers and other
sources to assist in the development of business plans and/or creation of new
business ventures.
Train employees regarding the procedures for product recall.
Participate with purchasing/materials management organizations, including GPO
affiliations and local, state, and national purchasing/materials/sterile processing
organizations (e.g., central sterile supply organizations).
Strategic Planning, Leadership and Compliance
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Ensure compliance with legal, regulatory, guidance documents, and accreditation
standards or codes to include:
1) Environmental Protection Agency (EPA)
2) Department of Transportation (DOT)
3) Hazard Communication Standard (HCS) including Material Safety Data Sheet (MSDS)
4) Association for the Advancement of Medical Instrumentation (AAMI)
5) The Joint Commission (TJC)
6) Health Insurance Portability and Accountability Act (HIPAA)
7) Americans with Disabilities Act (ADA)
8) National Fire Protection Association (NFPA)
9) Occupational Safety and Health Administration (OSHA)
10) Centers for Disease Control and Prevention (CDC)
11) Centers for Medicare & Medicaid Services (CMS)
12) National Incident Management System (NIMS)
13) Hospital Emergency Incident Command Systems (HEICS)
Strategic Planning, Leadership and Compliance
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Participate in supplier diversity procurement programs (e.g., Minority Business
Enterprises (MBE) initiatives, women-owned businesses, small businesses).
Ensure code compliance through inspections of specific areas (e.g., medical
gasses).
Comply with waste stream requirements including compliance with management
of hazardous waste.
Recognize the importance of MSDS and Employee Right to Know.
Investigate vendor credentialing (e.g., OIG).
Participate in emergency drills and training.
Describe evacuation plans for the department/building.
Describe primary components of the Emergency Preparedness Manual.
Coordinate emergency management with other healthcare facilities, suppliers and
community partners
Strategic Planning, Leadership and Compliance
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Oversee the department’s safety and emergency preparedness programs:
1) mass casualty or disaster response
2) hazardous material and waste
3) life/fire safety
4) medical equipment
5) safety
6) security
A. Develop business continuity plans in case of supply chain disruption.
B. Evaluate general disaster drills and security.
Supply Chain
Definitions
Definitions
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ABC, Activity based costing. Usually refers to costing method that breaks down overhead costs into
specific activities (cost drivers) in order to more accurately distribute the costs in product costing. Has also
been applied to customer and vendor management.
ABC stratification. Method used to categorize inventory into groups based upon certain activity
characteristics. Examples of ABC stratifications would include ABC by velocity (times sold), ABC by sales
dollars, ABC by quantity sold / consumed, ABC by average inventory investment, ABC by margin. ABC
stratifications are used to develop inventory-planning policies, set count frequencies for cycle counting,
slot inventory for optimized order picking, and other inventory management activities.
Allocations. Allocations in inventory management refer to actual demand created by sales orders or work
orders against a specific item. The terminology and the actual processing that controls allocations will
vary from one software system to another.
– Standard allocation is an aggregate quantity of demand against a specific item in a specific facility; I
have heard standard allocations referred to as normal allocations, soft allocations, soft
commitments, and regular allocations. Standard allocations do not specify that specific units will go
to specific orders.
– Firm allocation is an allocation against specific units within a facility, such as an allocation against a
specific location, lot, or serial number. Firm allocations are also referred to as specific allocations,
frozen allocations, hard allocations, hard commitments, holds, reserved inventory. Standard
allocations simply show that there is demand while firm allocations reserve or hold the inventory for
the specific order designated.
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Definitions
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ASN, Advanced shipment notification (EDI 856). Advanced shipment notifications are used to notify a
customer of a shipment. ASNs will often include PO numbers, SKU numbers, lot numbers, quantity, pallet
or container number, and carton number. ASNs may be paper-based, however, electronic notification is
preferred. Advanced shipment notification systems are usually combined with bar-coded compliance
labeling which allows the customer to receive the shipment into inventory through the use of bar-code
scanners and automated data collection systems.
Auto discrimination. The functionality of a bar-code reader to recognize the bar-code symbol being
scanned, thus allowing a reader to read several different symbols consecutively.
Batch picking. Order picking method where orders are grouped into small batches, an order picker will
pick all orders within the batch in one pass. Batch picking is usually associated with pickers with multitiered picking carts moving up and down aisles picking batches of usually 4 to 12 orders, however, batch
picking is also very common when working with automated material handling equipment such as
carousels. See also Zone picking, Wave picking.
Blind counts. Describes method used in cycle counting and physical inventories where you provide your
counters with item number and location but no quantity information.
BOM, Bill of material. Lists materials (components or ingredients) required to produce an item. Multilevel
BOMs also show subassemblies and their components. Other information such as scrap factors may also
be included in the BOM for use in materials planning and costing.
BULK. Term usually thought of as describing inventory arriving or being produced in the manufacturers
standard unit of sale, usually full-case quantities.
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Definitions
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Carrying cost. This is the cost associated with holding inventory. This includes the cost to finance the inventory
purchase as well as the general inventory shrinkage (e.g., pilferage, outdating and damage to product.)
Compliance labels. Standardized label formats used by trading partners. Compliance labels are used as shipping
labels, container/pallet labels, carton labels, or piece labels, and usually contain bar codes. Many bar-code
labeling software products now have the more common compliance label standards set up as templates.
Consignment inventory. Inventory that is in the possession of the customer, but is still owned by the supplier.
Consignment inventory is used as a marketing tool to make it easier for a customer to stock a specific supplier's
inventory. The customer pays for the inventory only after it is resold or consumed.
Contract warehouse. A contract warehouse is a business that handles shipping, receiving, and storage of products
on a contract basis. Contract warehouses will generally require a client to commit to a specific period of time
(generally in years) for the services. Contracts may or may not require clients to purchase or subsidize storage
and material-handling equipment. Fees for contract warehouses may be transaction and storage based, fixed,
cost-plus, or any combination. Also see Public Warehouse and 3PL.
COGS, Cost of goods sold. Accounting term used to describe the total value (cost) of products sold during a
specific time period. Since inventory is an asset, it is not expensed when it is purchased or produced. It instead
goes into an asset account (usually called Inventory). When product is sold, the value of the product (the cost,
not the sell price) is moved from the asset account to an expense account called cost of goods sold or
COGS. COGS appear on the profit-and-loss statement and are also used for calculating inventory turns.
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Definitions
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Cross docking. In its purest form cross docking is the action of unloading materials from an incoming trailer
or rail car and immediately loading these materials in outbound trailers or rail cars, thus eliminating the
need for warehousing (storage). In reality, pure cross docking is rare outside of transportation hubs and huband-spoke type distribution networks. Many "cross-docking" operations require large staging areas where
inbound materials are sorted, consolidated, and stored until the outbound shipment is complete and ready
to ship. This staging may take hours, days, or even weeks in which case the "staging area" is essentially a
"warehouse".
Cube utilization. Term used in Warehouse Management Systems. Cube logic is often incorporated but
seldom used in WMS systems because of its tendency to treat your product as liquid (fitting a round peg in a
square hole).
Cycle count. Refers to process of regularly scheduled inventory counts (usually daily) that "cycles" through
your inventory. User determines how often certain items/locations are counted.
DC. Distribution Center
Demand. The need for a specific item in a specific quantity.
Dimensional weight (a.k.a. Dim weight). Formula used to determine freight charges when the minimum
weight to volume ratio has not been met. Actual weight and dim weight are compared, and the larger
weight is used for the freight calculation. Dim weight is calculated by: Dim weight = (Length x Width x
Height)/194. All dimensional measurements are in inches.
Distribution. Describes the process of storing, shipping, and transporting goods. Also describes the facilities
(distribution operations, distribution centers) that conduct these activities. In statistical analysis, describes
the measurement of a group of events or occurrences. (See Normal distribution.)
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Dock leveler. Device that provides a bridge to the trailer as well as a ramp to facilitate the transition in
height from dock to trailer. Dock levelers are rated by weight capacity and by the service range. The
service range, also known as the height differential, rates the safe range above and below dock level you
can use the leveler to transition to the trailer height.
DRP, Distribution requirements planning. Process for determining inventory requirements in a multiple
plant/warehouse environment. DRP may be used for both distribution and manufacturing. In
manufacturing, DRP will work directly with MRP. DRP may also be defined as Distribution Resource
Planning that also includes determining labor, equipment, and warehouse space requirements.
Drive-in rack. Racking system designed to allow a lift truck to drive into the bay creating very high-density
storage for non-stackable loads. Useful for operations with limited SKUs and high quantities of pallets per
SKU. FIFO is difficult to maintain in drive-in racking systems. A.k.a. Drive-thru Rack.
EDI, Electronic Data Interchange. A method of electronic commerce between suppliers and end users.
EDI Standard Transaction Sets
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Price/Sales Catalog 832
Request for Quote 840
Response to RFQ 843
Purchase Order 850
Product Activity Data/On Hand Inventory 852
Purchase Order Acknowledgment 855
Advanced Shipping Notice 856
Receiving Advice 861
Invoice 810
Remittance 820
Contract Compliance Reporting/Trace Sales Rebates 867
Membership 816
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Definitions
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EOQ, Economic order quantity. Result of a calculation that determines the most cost effective quantity to
order (purchased items) or produce (manufactured items). The formula basically finds the point at which
the combination of order cost and carrying cost is the least. The standard formula is EOQ = Square Root [2 *
(Annual Usage) * (Order Cost) / (Annual Carrying Cost/unit)]. The difficult part of implementing the formula
is getting accurate values for order cost and carrying cost.
ERP, Enterprise resource planning. Describes software systems designed to manage most or all aspects of a
manufacturing or distribution enterprise (an expanded version of MRP systems). ERP systems are usually
broken down into modules such as Financials, Sales, Purchasing, Inventory Management, Manufacturing,
MRP, DRP. The modules are designed to work seamlessly with the rest of the system and should provide a
consistent user interface between them. These systems usually have extensive set-up options that allow you
to customize their functionality to your specific business needs. Unfortunately, in the real world, ERP
systems rarely are sufficient to meet all business needs and a myriad of other software packages such as
Customer Relationship Management (CRM), Manufacturing Execution Systems (MES), Advanced Planning
and Scheduling (APS), Warehouse Management Systems (WMS) and Transportation Management Systems
(TMS) are being sold to make up for these deficiencies.
FIFO, First-in-first-out. In warehousing describes the method of rotating inventory to use oldest product
first. Actually an accounting term used to describe an inventory costing method.
Fill Rate. The percentage of line items requisitioned that are successfully supplied to the requisitioning
customer. The fill rate can be calculated as the line items furnished to the customer divided by the total line
items requisitioned.
53
Definitions
•
•
•
•
•
•
•
•
Flow rack. Racking system that incorporates sections of conveyor to allow the cartons or pallets to flow to
the face of the rack. Stocking is performed from the rear of the rack.
FOB, Free on board. A freight term that refers to the point of delivery of goods, products, and equipment
from the supplier to the buyer. FOB also determines the point at which title passes from supplier to the
deliver site.
FOB Destination. The supplier absorbs all transportation costs and files claims for damages incurred. The
facility does not receive title until the items are received at the dock.
FOB Shipping Point. The title of the goods passes to the facility at the origin of shipping. The facility is
responsible for all shipping costs and for filing any damage claim.
FOB Destination, Prepay Freight, and Add. The supplier prepays the freight charges and adds this cost to the
facility’s invoice. The supplier is responsible for filing all damage claims. The title does not transfer until the
item is received at the facility dock.
FOB Shipping Point, Freight Allowed. The title passes to the facility when the carrier picks up the goods, but
the supplier reimburses the facility for the cost of shipping.
Forecast. A Forecast is an estimation of future demand. Most forecasts use historical demand to calculate
future demand. Adjustments for seasonality and trend are often necessary.
Forecast Consumption. Forecast Consumption describes the method(s) your inventory management
software uses to reduce forecasted demand by the actual demand that occurs during the forecast
period. Incorrectly set up forecast consumption parameters or lack of functionality related to forecast
consumption can often create serious problems with planning systems.
54
Definitions
•
•
•
•
•
•
Fulfillment. Describes the activity of processing customer shipments. Though most manufacturing and
warehouse operations will process customer shipments, this term usually refers to operations that ship
many small orders (usually parcels) to end users as opposed to operations that process larger shipments to
other manufacturers, wholesalers, or resellers. Examples of fulfillment operations would include
operations that process shipments for mail-order catalogs, Internet stores, or repair parts.
High-piled combustible storage. Term used in fire codes to refer to codes relating to floor or racked
storage exceeding 12 feet in height or high-hazard commodity storage exceeding 6 feet in height.
Inventory turn. Number of times inventory turns during a one year period. Generally calculated by
dividing the average dollars issued annually divided by average inventory levels (or current inventory
level.)
JIT, Just-in-time. Term usually thought of as describing inventory arriving or being produced just in time
for the shipment or next process. Actually, JIT is a process for optimizing manufacturing processes by
eliminating all process waste including wasted steps, wasted material, excess inventory, etc.
Laser scanner. Device that uses a moving laser to read bar codes. Devices can be portable hand-held units,
or fixed units.
Lead-time. Amount of time required for an item to be available for use from the time it is ordered. Leadtime should include purchase order processing time, vendor processing time, in transit time, receiving,
inspection, and any pre-pack times.
55
Definitions
•
•
•
•
Lead-time demand. Forecasted demand during the lead-time period. For example, if your forecasted demand
is 3 units per day and your lead-time is 12 days, your lead-time demand would be 36 units.
LIFO, Last-in-first-out. In warehousing, describes the method for using the newest inventory first (I've never
seen an operation that uses this). In accounting, it's a term used to describe an inventory costing method. See
FIFO.
Lift truck. Describes vehicles used to lift, move, stack, rack, or otherwise manipulate loads. Material handling
workers use a lot of terms to describe lift trucks; some terms describe specific types of vehicles, others are slang
terms or trade names that people often mistakenly use to describe trucks. Terms include, industrial truck,
forklift, reach truck, motorized pallet trucks, turret trucks, counterbalanced forklift, walkie, rider, walkie stacker,
straddle lift, side loader, order pickers, high lift, cherry picker, Jeep, Tow motor, Yale, Crown, Hyster, Raymond,
Clark, Drexel.
Locator system (a.k.a. Location system, Bin locations). Locator systems are inventory-tracking systems that
allow you to assign locations to your inventory to facilitate greater tracking and the ability to store product
randomly. Prior to locator systems, warehouses needed to store product in some logical manner in order to be
able to find it (stored in item number sequence, by vendor, by product description, etc.) By using locator
systems you can increase space utilization by slotting your product by matching the physical characteristics of
the product to a location whose physical characteristics match that of the product. You can also increase
productivity by locating fast moving product to closer, more accessible locations, and increase accuracy by
separating similar items. Location functionality in software can range from a simple text field attached to an
item that notes a single location, to systems that allow multiple locations per item and track inventory
quantities by location. Warehouse management systems (WMS) take locator systems to the next level by
adding functionality to direct the movement between locations.
56
Definitions
•
•
•
•
•
Longitudinal flue space. Term used by fire codes to describe the space between the rows of back-to-back
racking. Flue spaces allow the water from an overhead sprinkler system to reach lower levels of the rack.
Normally a longitudinal flue space of at least 6 inches is required. It is important to note that the flue
space is measured as the distance between the loads, not the distance between the racks.
LTL, Less-than-truckload. Transportation term that describes shipments that are less than a trailer load in
size. LTL also is used to describe the carriers that handle these loads. LTL carriers generally use
strategically placed hubs to sort and consolidate LTL shipments into full-truck-load shipments.
LUM, Low unit of measure. Term usually thought of as describing inventory arriving or being produced in
the smallest unit of measure, usually by the each. Products are picked, packed, and shipped for a specific
end-user stocking location. Packages arrive at the facility with the majority of the external packaging
(cardboard) already removed. LUM is a process for eliminating package breakdown and minimizing
product touch points.
Mezzanine. A tiered structure within a building used to provide worker access to various
levels. Mezzanines can be freestanding structures supported by posts and trusses, or can be a series of
walkways supported by storage equipment (rack-supported mezzanine).
Min-max. A simplistic inventory system in which a minimum quantity and maximum quantity are set for
an item. When the quantity drops below Min you order up to the Max.
57
Definitions
•
•
•
•
•
•
•
MRP/MRPII, Manufacturing resource planning. Process for determining material, labor and machine
requirements in a manufacturing environment. MRPII is the consolidation of Material Requirements
Planning (MRP), Capacity Requirements Planning (CRP), and Master Production Scheduling (MPS). MRP
was originally designed for materials planning only. When labor and machine (resources) planning were
incorporated it became known as MRPII. Today the definition of MRPII is generally associated with MRP
systems.
MRO, Maintenance, repair and operating inventory. Term used to describe inventory used to maintain
equipment as well as miscellaneous supplies such as office cleaning supplies.
Optional replenishment. Term used to describe the action of ordering or producing up to the Max in a
Min-Max system even though inventory has not reached the Min.
Order cycle. Also called replenishment cycle, order cycle refers to the time between orders of a specific
item. Most easily calculated by dividing the order quantity by the annual demand and multiplying by the
number of days in the year.
Physical inventory. Refers to the process of counting all inventory in a warehouse or plant. Operations are
usually shut down during a physical inventory.
Pushback rack. Racking system that incorporates a carriage or other sliding device to allow you to feed
multiple pallets into the same location "pushing back" the previous pallet.
Public warehouse. A public warehouse is a business that provides short or long-term storage to a variety
of businesses, usually on a month-to-month basis. A public warehouse will generally use their own
equipment and staff, however, agreements may be made where the client either buys or subsidizes
equipment. Public warehouse fees are usually a combination of storage fees (per pallet or actual sq.
footage) and transaction fees (inbound and outbound). Public warehouses are most often used to
supplement space requirements of a private warehouse.
58
Definitions
•
•
•
•
•
•
Radio frequency (RF). In warehousing refers to the portable data collection devices that use radio
frequency to transmit data to host system.
Rail-guided. Guidance system used with very-narrow-aisle vehicles such as order selectors and turret
trucks. A steel rail is mounted on each side of the aisle, and rollers are mounted on the lift truck to guide it
between the rails.
Random location storage. Refers to storage method where a product may be stored in any
location. Random storage has higher space utilization and generally lower accuracy than fixed location
storage.
Reach truck (a.k.a. Stand-up reach, Straddle reach, Double-deep reach). The reach truck is a narrow-aisle
(8'-10') lift truck designed specifically for racked pallet storage. It consists of outriggers in front and
telescoping forks that use a hydraulic scissors-type mechanism that allow you to pick up the load and
retract it over the outriggers reducing the overall truck and load length, allowing you to turn in a narrower
aisle. Double-deep reach trucks use an extended reach mechanism that allows you to store pallets twodeep in specially designed double-deep rack. Reach trucks are designed for racking areas only and do not
work for loading trucks or quickly moving loads over distances.
Reorder point. The inventory level set to trigger reorder of a specific item. Reorder point is generally
calculated as the expected usage (demand) during the lead-time plus safety stock.
Reverse logistics (a.k.a. Returns). Reverse Logistics covers activities related to returned product, returned
pallets and containers, returned materials for disposal or recycling.
59
Definitions
•
•
•
•
•
RFID, Radio Frequency Identification. Mostly used in equipment tracking. It is an automatic identification
method, relying on storing and remotely retrieving data using devices called RFID tags or transponders. An
RFID tag is a small object that can be attached to or incorporated into a product or piece of equipment.
RFID tags contain silicon chips and antennas to enable them to receive and respond to radio-frequency
queries from an RFID transceiver. Passive tags require no internal power source, whereas active tags
require a power source.
Roller conveyor. Type of conveyor that uses rollers to move materials. Roller conveyor may be automated
(live roller) or simply use gravity (gravity roller) to move materials.
Safety stock. Quantity of inventory used in inventory management systems to allow for deviations in
demand or supply. Safety stock calculations will take into account historic deviations and use a required
service level multiplier to determine the optimal safety stock level.
Service factor. Factor used as a multiplier with the Standard Deviation to calculate a specific quantity to
meet the specified service level.
Shipping manifest system. Software used to associate shipments with carrier, service, rate, etc. Shipping
manifest systems will produce a report (physical or electronic) that is sent to the carrier to be used for
billing purposes. Shipping systems will usually produce shipping documents such as compliance shipping
labels, bill of ladings, Export documents, and Hazmat documentation. They may also have functionality
related to rate shipping, freight policy execution, freight cost management.
60
Definitions
•
•
•
•
SKU, Stock keeping unit. Referring to a specific item in a specific unit of measure. For example, if you
distributed thirty-weight motor oil in both quarts and gallons you would maintain the inventory as two
SKUs even though they are both thirty-weight motor oil. Also refers to the identification# assigned to each
SKU.
Slotting. Slotting describes the activities associated with optimizing product placement in pick locations in
a warehouse. There are software packages designed just for slotting, and many WMS packages will also
have slotting functionality. Slotting software will generally use item velocity (times picked), cube usage,
and minimum pick face dimensions to determine best location.
Structural pallet rack. Racking system that uses bolts or other mechanical fasteners (as opposed to
Boltless Pallet rack). Structural Pallet Rack is sometimes used to support the roof of the structure (Racksupported buildings), eliminating the need for posts.
Third-party logistics, 3PL. Describes businesses that provide one or many of a variety of logistics-related
services. Types of services would include public warehousing, contract warehousing, transportation
management, distribution management, and freight consolidation. A 3PL provider may take over all
receiving, storage, value added, shipping, and transportation responsibilities for a client and conduct them
in the 3PL's warehouse using the 3PL's equipment and employees, or may manage one or all of these
functions in the client's facility using the client's equipment, or any combination of the above. Another
term, 4PL is sometimes used to describe businesses that manage a variety of logistics related services for
clients by using 3PLs.
61
Definitions
•
•
•
•
Total Delivered Cost (also referred to as Total Cost of Ownership). This type of cost evaluation involves
looking at all aspects of the product cycle. The key components include all of the following: Cost for
placing the order, Purchase price for the product or item, Administrative costs of receiving, Warehousing,
Inventorying, Issuing, and Delivery. It may also include holding costs, pilferage, obsolescence, disposal
costs, and residual value offset, if any.
Transverse flue space. Term used by fire codes to describe the space to either side of pallet in racked
storage. Flue spaces allow the water from an overhead sprinkler system to reach lower levels of the rack.
Normally a transverse flue space of at least 3 inches is required. Also see Longitudinal Flue Space.
Unit of measure (U/M, UOM). The unit of measure describes how the quantity of an item is tracked in
your inventory system. The most common unit of measure is "eaches", which simply means that each
individual item is considered one unit. An item that uses "cases" as the unit of measure would be tracked
by the number of cases rather than by the actual piece quantity. Other examples of units of measure
would include pallets, pounds, ounces, linear feet, square feet, cubic feet, gallons, thousands, hundreds,
pairs, dozens. Also see Unit-of-measure Conversion.
Unit-of-measure conversions. A unit-of-measure conversion is needed whenever you work with multiple
units of measure. For example, if you purchased an item in cases (meaning that your purchase order
stated a number of cases rather than a number of pieces) and then stocked the item in eaches, you would
require a conversion to allow your system to calculate how many eaches are represented by a quantity of
cases. This way, when you received the cases, your system would automatically convert the case quantity
into an each quantity.
62
Definitions
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•
•
•
Vendor-managed inventory. Phrase used to describe the process of a supplier managing the inventory levels
and purchases of the materials he supplies. This process can be very low tech, such as an office supplies
supplier or maintenance supplies supplier coming into your facility once per week to visually check stock
levels and place a re-supply order, or high tech, such as an electronic component supplier having remote
access to your inventory management and MRP system and producing and automatically shipping to meet
your production schedule. Vendor-managed inventory reduces internal costs associated with planning and
procuring materials and enables the vendor to better manage his inventory through higher visibility to the
supply chain. Vendor-managed inventory may be owned by the vendor (consignment inventory) or the
customer.
Wave picking. A variation on zone picking where rather than orders moving from one zone to the next for
picking, all zones are picked at the same time and the items are later sorted and consolidated into individual
orders. Wave picking is the quickest method for picking multi item orders; however the sorting and
consolidation process can be tricky. See also batch picking, zone picking.
Warehouse management system, WMS. Computer software designed specifically for managing the
movement and storage of materials throughout the warehouse. WMS functionality is generally broken down
into the following three operations: Put away, Replenishment, and Picking. The key to these systems is the
logic to direct these operations to specific locations based on user-defined criteria. WMSs are often set up to
integrate with data-collection systems. In Materials Management, these systems are referred to as MMIS
(Materials Management Information Systems.)
Zone picking. Order picking method where a warehouse is divided into several pick zones, order pickers are
assigned to a specific zone and only pick the items in that zone, orders are moved from one zone to the next
(usually on conveyor systems) as they are picked (also known as "pick-and-pass"). See also batch picking,
wave picking.
63
Practice Examination
Next we’ll concentrate on questions from the practice exam
• We will analyze the question and decide if it is one that we may want to postpone
until later due to the time constraints. We only have two hours on test day, and
some of the math related questions can be time consuming.
• We will scan for the correct answer to jump out at us
• If that does not happen, we will start the process of elimination
• And hopefully be able to target the answer AHRMM deems to be correct.
• No penalty for guessing so take the leap of faith if you don’t know and go with
your gut.
• Recommend going with your first instinct and not going back and changing
answers later.
Pre-Test Questions
1. Which of the following is a vertical transport
system designed to accommodate a wider
variety of items than a pneumatic tube
system?
A.
B.
C.
D.
Cart lift
Monorail
Dumbwaiter
Conveyor
65
Pre-Test Questions
2. User roles and privileges established in the material management
information system (MMIS) are important to maintain.
A.
B.
C.
D.
Inventory turns.
System performance.
Data visibility.
System security.
66
Pre-Test Questions
3. An ABC analysis is performed to
A.
B.
C.
D.
Improve cash flow
Identify inventory items by high, medium, and low value/usage.
Improve space , labor and financial resource utilization
Identify and segment key products for value analysis projects
67
Pre-Test Questions
5. A facility is part of a 10-facility integrated delivery network (IDN). Which
of the following should be considered FIRST for cost effective disposal of
surplus medical equipment?
A.
B.
C.
D.
Donation to a non-profit organization.
Auction of equipment by an outside company.
Transfer to another facility within the IDN.
Disposal in an environmentally-friendly manner.
68
Pre-Test Questions
6.
Work flow in sterile processing should begin with
A.
B.
C.
D.
Sterilization.
Decontamination.
Assembly.
Sterile storage.
69
Pre-Test Questions
7. The Coalition for Healthcare eStandards
(CHeS) is an organization that
1) Is dedicated to promoting the adoption and use of open data standards in
healthcare.
2) Endorses the global location number (GLN) standard.
3) Operates for profit, and is driven by group purchasing organizations (GPO).
4) Includes the Department of Defense and Department of Veterans' Affairs.
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
70
Pre-Test Questions
8. Which of the following can result in an inventory discrepancy that
requires adjustment?
1.
2.
3.
4.
Data entry error
Inventory valuation method
Theft
Fill rate
A. 1, 2, and 3 only
B. 1, 2, and 4 only
C. 1, 3, and 4 only
D. 2, 3, and 4 only
71
Pre-Test Questions
9. A new clinical area is being added. Which of the following best describes a
one-time investment cost?
A. Computer and printer system
B. Order transmission devices between clinical and distribution
areas
C. Labor resources required to manage the new area
D. Shelving in the new area to establish PAR levels
72
Pre-Test Questions
10. Which of the following are generally accepted practices if a facility receives an
accidental over shipment of a product that is routinely used?
1) The receiving clerk informs the buyer and the accounts payable clerk of the
over shipment, and documents the variance.
2) The buyer consults with the customer department to learn if the over
shipment can be used and accepted.
3) The buyer directs the receiving agent to accept the goods, and requests a
credit memo from the vendor.
4) The buyer directs receiving to accept the goods, and instructs the accounts
payable clerk to pay the total amount due.
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
73
Pre-Test Questions
11. Of the following, the LEAST efficient strategy for storing products in a
storeroom is by
A.
B.
C.
D.
Commodity group.
Most frequently picked items.
Stock number sequence.
Department.
74
Pre-Test Questions
12. Which of the following describes the correct order of the purchase process?
A.
B.
C.
D.
PO, acceptance, invoice matching, PR, delivery, payment
PO, delivery, invoice matching, acceptance, PR, payment
PR, PO, acceptance, delivery, invoice matching, payment
PR, PO, delivery, acceptance, invoice matching, payment
75
Pre-Test Questions
13. In the event of a positive biological indicator in a sterilize load, which of the
following steps must be followed?
1) Check wrapping for integrity.
2) Isolate the load.
3) Rewrap and reprocess the load.
4) Notify infection control and risk management if any
were used before the test was read
A.
B.
C.
D.
sets
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
76
Pre-Test Questions
14. Advantages of a Group Purchasing Organization (GPO) over a single
facility's purchasing department include
1)
2)
3)
4)
Aggregated volume.
Member compliance.
Staff time reduction.
Product information.
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
77
Pre-Test Questions
15. Components in calculating the total delivered cost of an item include
1)
2)
3)
4)
Order management administrative costs.
Receiving costs.
Warehousing location.
Source of funds.
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
78
Pre-Test Questions
17.Which organization develops manufacturing
standards for surgical instrumentation?
A.
B.
C.
D.
AHA
AORN
ASHCSP
AAMI
79
Pre-Test Questions
16.Application-to-application exchange of
business data using a standard format is
A.
B.
C.
D.
An electronic data interchange.
An application service provider.
Business-to-business e-commerce.
An integrated delivery network.
80
Pre-Test Questions
17.Which organization develops manufacturing
standards for surgical instrumentation?
A.
B.
C.
D.
AHA
AORN
ASHCSP
AAMI
81
Pre-Test Questions
18.Processing with peracetic acid is considered
to be
A.
B.
C.
D.
Sterilization.
High-level disinfection.
Decontamination.
Disinfection.
82
Pre-Test Questions
19.The most effective means for reducing crosscontamination in a healthcare setting is
A.
B.
C.
D.
Decontaminating equipment.
Handwashing.
Training on infection control techniques.
Ensuring clean linens are used.
83
Pre-Test Questions
20.A HIPAA compliance program for a
purchasing department should include a
1) Vendor confidentiality statement covering protected information.
2) Clause inserted into every contract that covers protected
information.
3) Statement reflecting the facility gifting policy.
4) Statement describing actions taken if a policy is violated.
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
84
Pre-Test Questions
21.If a vendor representative is involved in a
surgical case, which of the following
information may not be disclosed to the
vendor's company under the Health Insurance
Portability and Accountability Act (HIPAA)?
A.
B.
C.
D.
Items used in case
Physician's name
Case date
Patient diagnosis
85
Pre-Test Questions
SCENARIO
• The next two items refer to this scenario. First, study the
description of the situation.
• Then select the one best answer to each question following it.
 During the first quarter of a year, three products were ordered on
separate purchase orders at a price of $100.00 each. Payment
terms with the vendor are, "3% 10, net 30, and a contractual 5%
rebate on all purchases paid quarterly." Two of the three invoices
were paid in 5 days and the third was paid in 25 days. No other
products were purchased from the supplier in the first quarter of
the year.
86
Pre-Test Questions
22.What was the total amount paid or remitted
to the vendor during the first quarter?
A.
B.
C.
D.
$279.00
$291.00
$294.00
$300.00
23.The rebate check from the vendor for the
first quarter is
A.
B.
C.
D.
$ 5.00
$14.00
$15.00
$24.00
87
Pre-Test Questions
24.A physician insists that products of multiple
brands and sizes be available in the operating
room stock. To maintain a neutral inventory
financial position, the best negotiation
strategy is
A.
B.
C.
D.
Consolidation.
Just-in-time.
Stockless.
Consignment.
88
Pre-Test Questions
25.Which of the following is a method used to
inventory patient care areas at a scheduled
time where materials are inventoried and
orders for needed items are filled and used
to restock shortages?
A.
B.
C.
D.
Master cart
Exchange cart
Card system
PAR level
89
Pre-Test Questions
26.An automated, computerized
information/decision support system is often
used for other than its intended purpose. This
problem is most likely related to
A.
B.
C.
D.
Garbage in/garbage out (GIGO).
Discipline.
Speed.
The number of terminals.
90
Pre-Test Questions
27.A community healthcare facility has canes
and crutches shipped directly to the Physical
Therapy Department. This is an example of
what type of distribution system?
A.
B.
C.
D.
Direct exchange
Emergency requisition
Stockless
PAR level
91
Pre-Test Questions
28.Which of the following should be included in
a purchasing process audit trail?
1)
2)
3)
4)
An authorized requisition from the requesting department
A purchase order produced by an authorized agent
Documents acknowledging acceptance of materials
An invoice generated by the facility's accounts payable department
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
92
Pre-Test Questions
The following information is known:
Accounts Receivable
Accounts Payable
Payroll Taxes
Fund Balances
$1,800,000
$600,000
$ 400,000
$4,600,000
29.What is the total value of the liabilities listed above?
A.
B.
C.
D.
$600,000
$1,000,000
$6,400,000
$7,400,000
93
Pre-Test Questions
30. Which of the following are the most important considerations when
designing a storeroom layout?
1)
2)
3)
4)
Safety issues
Traffic flow
Lighting
Proximity to delivery dock
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
94
Pre-Test Questions
31. Ingredients to a successful relationship between the facility and the
vendor include
1)
2)
3)
4)
Being open to criticism.
Commitment to the process.
Maintaining a confrontational position.
Sharing expected outcomes.
1)
2)
3)
4)
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
95
Pre-Test Questions
33. Benefits of capital equipment product standardization include
1)
2)
3)
4)
Reduced maintenance cost.
Stabilized purchase price.
Consistency in supply price.
Reduced days in accounts payable.
1)
2)
3)
4)
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
96
Pre-Test Questions
34.Which of the following may be effective in
controlling excessive trials and purchases of
expensive new equipment?
A.
B.
C.
D.
Value analysis
Technology assessment committee
Maintenance review activity
Financial control panel
97
Pre-Test Questions
34.Which of the following may be effective in
controlling excessive trials and purchases of
expensive new equipment?
A.
B.
C.
D.
Value analysis
Technology assessment committee
Maintenance review activity
Financial control panel
98
Pre-Test Questions
35.Which of the following orders delivers a
specific amount of product on a scheduled
basis?
A.
B.
C.
D.
Blanket
Standing
Open
Capital
99
Pre-Test Questions
36.When linking activity-based costing (ABC)
classification with usage frequency, existing
days of inventory, and desired days of
inventory, the highest possible cash flow can
be achieved by increasing turnover of
A.
B.
C.
D.
low dollar-high usage items.
low dollar-low usage items.
high dollar-low usage items.
high dollar-high usage items.
100
Pre-Test Questions
37.Capitated agreements result in set charges
for specific supplies by a supplier to a facility
based on
A. Break-even point.
B. Number of patients.
C. Number of procedures.
D. Value analysis.
101
Pre-Test Questions
38. A facility must purchase a new piece of equipment immediately. Capital funding is
not available until the next fiscal year. The following offers have been received:
Company A:
$118,000 for equipment delivered now, not paid for until new fiscal year,
no finance charges. Consumable annual cost is $15,000.
Company B:
$110,000 financed, delivered now, finance charges over term additional
$20,000. Consumable annual cost $12,000.
Company C:
Immediate delivery, no down payment, cost of equipment with no
interest added (listed as $120,000) will be added to the purchase of
consumable evenly over 3 years. Total consumable cost is $39,000.
Company D:
Immediate delivery, lease equipment for 3 years at a cost of $4,250 per
month including all consumables. Buyout at end of 3 year lease term is
$1.
102
Pre-Test Questions
38. Which of the following companies offers the
best value?
A.
B.
C.
D.
Company A
Company B
Company C
Company D
103
Pre-Test Questions
39. Which of the following is a strategic objective?
A. Reduce inventory by the end of the fiscal year.
B. Reduce inventory by 15% and maintain customer satisfaction.
C. Reduce inventory by 15% by the end of the fiscal year.
D. Reduce inventory by 20% and increase customer communication.
104
Pre-Test Questions
40.Use of an automatic replenishment system
(ARS) creates value by
A.
B.
C.
D.
Cataloging purchasing transactions.
Reducing manual PAR counting.
Automatically tracking instruments.
Tracking capital equipment.
105
Pre-Test Questions
41. Ethylene oxide (EtO) gas is used for
A.
B.
C.
D.
Cleaning.
Anesthesia.
Disinfection.
Sterilization.
106
Pre-Test Questions
42.Key elements of an effective asset
management program include
1)
2)
3)
4)
Recording maintenance data in the asset information log.
Requiring vendor-provided, no-cost in-services.
Sequestering equipment upon receipt to permit inspection and testing.
Tagging assets upon acceptance.
–
–
–
–
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
107
Pre-Test Questions
43.Which of the following is the primary
advantage of enterprise resource planning (ERP)
systems over traditional automated information
systems?
A.
B.
C.
D.
Data sharing ability across the entire organization
Improved screen response times
Maximum flexibility for adapting to existing processes
Superior level calculations
108
Pre-Test Questions
44. Analyzing which of the following equipment criteria is considered most
important for grouping items for contract coverage to cut equipment
maintenance costs?
1)
2)
3)
4)
Cost
Manufacturer
Location
Function
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
109
Pre-Test Questions
45. A facility is planning to move and renovate its Sterile Processing
Department. Which of the following should be considered in equipment
requirements and location?
1)
2)
3)
4)
Proximity to the department's largest user
Type of devices processed
Number of loads processed
Existing infrastructure
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
110
Pre-Test Questions
46.In customer service programs, the resilience
is best exemplified by
A.
B.
C.
D.
Developing value added programs.
The ability to respond to failures.
Serving customers effectively.
Performing the basics well.
111
Pre-Test Questions
47.A provider reimbursement method that
generates a fixed payment per patient,
independent of the cost or amount of services
provided, is
A.
B.
C.
D.
Capitation.
Prospective payment.
Fee-for-service.
Periodic interim payments.
112
Pre-Test Questions
48.Which of the following factors is most
important when considering purchase of a
tugger system?
A.
B.
C.
D.
Type of MMIS
Number of dock spaces
Number of electrical outlets in the department
History of Workers' Compensation claims
113
Pre-Test Questions
49. Demand ordering is defined as a
A. Term applied to the incoming or outgoing of supplies.
B. Technique to speed product final assembly in response to actual
customer orders.
C. Term used for techniques that use actual usage, rather than
forecasts, as a basis for replenishment.
D. Strategic plan concept where there is only one driving force in
which a company competes.
114
Pre-Test Questions
50.Two facilities are combining their inventories under
a recent merger and must determine the average
cost of each product. Facility A purchased 100 cases
of an item at $9.00 per case. Facility B purchased
100 cases of the same product at $8.00 per case.
What is the average cost per case of the combined
inventory?
A. $8.00
B. $8.50
C. $9.00
D. $17.00
115
Pre-Test Questions
51. Which of the following is the correct sequence of stages in the process
improvement cycle?
1)
2)
3)
4)
5)
improve
measure
control
define
analyze
A.
B.
C.
D.
1, 4, 5, 3, 2
2, 1, 5, 3, 4
4, 2, 5, 1, 3
5, 1, 4, 2, 3
116
Pre-Test Questions
52.Which of the following is the statute of
limitations of a lease contract under the
Uniform Commercial Code (UCC)?
A.
B.
C.
D.
3 years
4 years
7 years
10 years
117
Pre-Test Questions
53.Completion of a returned goods
authorization (RGA) should result in
A.
B.
C.
D.
A revised invoice.
A freight claim.
An original invoice.
A credit memo.
118
Pre-Test Questions
54. A healthcare facility has decided to buy a new enterprise resource planning
(ERP) system. The materials management module of the new ERP system
does not support current processes. The best initial course of action is to
A. Ask IT staff to modify the software to meet required functional
capabilities.
B. Urge the facility to purchase a second system to meet functional
requirements.
C. Remove functional requirements not covered in the ERP system.
D. Look for different ways to fulfill functionality with the new ERP
system.
119
Pre-Test Questions
55. Which of the following is the proper sequence to select a vendor before
implementing a materials management information system (MMIS)?
1)
2)
3)
4)
Develop a task force or project team.
Send out a request for proposal.
Define functional requirements.
Evaluate vendor qualifications and conduct a proposal
analysis.
A.
B.
C.
D.
1, 2, 3, 4
1, 2, 4, 3
1, 3, 2, 4
2, 1, 3, 4
120
Pre-Test Questions
56. Which of the following are requisitions used to communicate needs of a
requestor to purchasing?
1)
2)
3)
4)
Blanket
Electronic
Paper
Traveling
A.
B.
C.
D.
1, 2, and 3 only
1, 2, and 4 only
1, 3, and 4 only
2, 3, and 4 only
121